Why Does a Business need to Apply The Blue Ocean Strategy?

It allows a company to,

• Make competition irrelevant by creating a new market.
• Capture the demand in this new market.
• Break value-cost tradeoff.

A Detailed Description of the Blue Ocean Strategy

Blue Ocean Strategy divides the market into two categories: Red Ocean and Blue Ocean.

Red Ocean stands for all existing industries. Intense competition in these industries turns the ocean to blood red and makes them red ocean.

In a Red Ocean, a company can pursue two alternative strategies:

• Cost Leadership
• Differentiation

In a Red Ocean, these two strategies cannot be accomplished simultaneously. Efforts of a company to be the cost leader prevents it from creating the value that would differentiate it.

Blue Ocean stands for all industries not in existence today, the unknown part of the market. It is the part where new demand is to be created instead of fighting for the existing demand. Here, the rules of the game are not set yet. Competition is irrelevant. There is a big and profitable opportunity.

In a Blue Ocean, it is possible to be the cost leader and differentiate at the same time. Blue Ocean Strategy is the pursuit of achieving them both.

How to Apply the Blue Ocean Strategy Succesfully

In our previous articles, we explained the application of each tool step by step. However, in the case Blue Ocean Strategy, there are several tools that must be applied harmoniously. Therefore, in this article, we will briefly mention these tools and leave their details to next articles:

• Value Innovation: Simultaneous pursuit of differentiation and low cost.
• Strategy Canvas: Compares your company and competitors in terms of offerings to customers.
• Four Actions Framework: Reconstructs buyer value elements in crafting a new strategic profile.
• ERRC Grid: Complements the Four Actions Framework and it pushes companies not only to ask the questions but also to act.
• Six Paths Framework: Enables companies to successfully identify opportunities in the market.
• Pioneer-Migrator-Settler Map: Plots companies’ current and planned portfolios on the map.
• Three Tiers of Non-Customers: Helps companies to turn non-customers into customers.
• The sequence of Creating a Blue Ocean: Provides the necessary steps for the profitable implementation of Blue Ocean Strategy.
• Buyer Utility Map: Allows you to identify the needs of your customers that are not already met.
• The Price Corridor of the Mass: A tool to determine the right price to unlock the mass of target buyers.
• Four Hurdles to Strategy Execution: Enables companies to analyze the factors that can prevent the implementation of the strategy and take precautions.
• Tipping Point Leadership: Complements the Four Hurdles to Strategy Execution and allows to determine what actions should be taken to implement the strategy.
• Fair Process: Allows to design the process management that must be exhibited to successfully implement the strategy.

As a brief:

Blue Ocean Strategy offers an integrated system to create new opportunities by reviewing established business styles and generic strategies.

Contact us to innovate a new business model that will help your company gain new customers.